Академический Документы
Профессиональный Документы
Культура Документы
Incorporation of
company
Procedures of incorporation
• Lee formed the company named Lee’s Air Farming Ltd. He owned
all the shares except one. He was the company’s sole governing
director. He was also employed by the company as its chief and only
pilot. Lee was killed while flying for the company.
• His wife made a claim for workmen’s compensation under the New
Zealand workmen’s compensation legislation. Her entitlement to
such compensation depended on whether or not Lee was a worker.
• The New Zealand Court of Appeal refused to hold that Lee was a
worker, holding that a man could not in effect, employ himself.
Held
• The Privy Council allowed Mrs Lee’s claim. Lee may have been the
controller of the company in fact but in law, they were distinct
persons.
• He could therefore enter into a contract with the company, and could
be considered to be an employee. The widow was therefore entitled to
an award in respect of workmen’s compensation.
• Read : The case of Abdul Aziz b Atan & ors v Ladang Rengo Malay
Estate Sdn Bhd [1985] 2 MLJ 165
• Yap Sing Hock v PP [1992] 2 MLJ 714
• Abdul Aziz Bin Atan & 87 ORS vs Ladang Rengo Malay Estate SDN BHD (1985) 2 MLJ
165 is another case where all the shareholders of the company sold and transferred their
entire share holdings to a certain buyer. Therefore, the court had to determine whether a
change of employer took place.
• Held: An incorporated company is a legal person separate and distinct from its shareholders.
The company, from the date of incorporation, has perpetual succession and did not change
its identity or personality even though the entire shareholding of the company changed
hands.
• Yap Sing Hock & Anor v Public Prosecutor (1992) Directors of a company were prosecuted
under Section 67(3) of Companies Act 1965 in relation to breach of the financial assistance
provision of that legislation and criminal breach of trust in relation to two sums of money.
The two accused were directors of the company and one of the accused was the beneficial
owner of all shares in the company. The accused was convicted and appealed on the grounds
that inter alia a person who is the sole beneficial shareholder could not be liable for breach
of trust.
Application of the Principles of Separate Entity
• i) Perpetration of Fraud
• The corporate veil may be lifted if the company is
used as a means to perpetrate a fraud.
• Aspatra Sdn Bhd & 21 Ors v Bank Bumiputra
Malaysia Bhd & Anor [1988]
• Aspatra Pvt. Limited. v. Bank Bumiputra Malaysia Bhd
(1988) 1 MLJ (Supreme Court of Malaysia)